THE future of Townlands Hospital in Henley will be resolved soon, according to a town councillor.

Ian Reissmann says that the current “financial difficulties” surrounding the funding of the £8.7 million redevelopment will be ironed out by the end of the month.

Insurance giant Aviva is stalling on a £7million loan towards the cost of the new “health campus”, which was granted planning permission in November.

The company fears its investment could be devalued by the abolition of primary care trusts on April 1 because the loan would no longer be guaranteed by the Treasury.

Aviva has been in talks with the Department of Health but so far no agreement has be reached.

Councillor Reissmann, who is chairman of the Townlands steering group, told a meeting of the town council that the delay was “regrettable”.

But he added: “The trust is still committed and optimistic about the project being sent for financial closure in the next few weeks.”

Cllr Reissmann said the developer Amber Solutions for Care had stopped working on the project until the issue was resolved and that would inevitably lead to more delays. He added: “While we are concerned that there is a delay we just continue to engage with the members of the trust.”

Councillor Will Hamilton said the steering group should reform and put pressure on finding a solution.

“I am quite shocked and deeply concerned that we appear to be hitting a block,” he said. “If the developer has stopped working, that’s a serious thing. If we have reached an impasse, let’s look at it. If we have got a problem, let’s do something about it. Everyone has done so much work — we have got to get a shovel in the ground.”

Cllr Reissmann replied: “The delays are very unfortunate and the Government reorganisation is directly responsible. The reassurances I have been given by Riana Relihan, the project manager, is that things will be resolved in the next two to three weeks.”

He pledged to call a meeting of the steering group so the DoH “understands what it means to a community like ours” but he didn’t feel this was necessary now.

Cllr Reissmann said: “There is no pressure we can usefully apply right now because the process is in motion. I have been assured that within the next two to three weeks that the issue will be resolved. If there is no action, I will hold a meeting of the steering group but I believe the situation is in hand.”

Meanwhile, former Mayor Barry Wood says the latest delay could be an opportunity to rethink the project.

In a letter to this week’s Standard, he calls for the new hospital to be build on the Waterman’s allotments site in Reading Road, which the town council owns, and sell off the hospital site for new low-cost homes.

He claims this would be a no-cost option which would benefit everybody.

Dr Wood, who chairs UNITED!, a group of residents campaigning on housing development in Henley, said his proposal would increase economic development in the town and reduce car journeys, improving air quality.

He says the allotments could move to a new custom-designed site.

Henley MP John Howell wrote to Health Secretary Jeremy Hunt asking him to “bring Townlands to fruition” and was told that it remained a “top priority” for the NHS.